The battle for automotive digital transformation has begun: Who will win among the unstoppable technology giants?

Technology giants such as Baidu, Tencent, and Huawei are also fiercely competing for layout as auto companies transform.

The digitalization of automobile products and enterprise operations will become a strategic choice that traditional automakers have to face. The article analyzes the core changes in the digital transformation of traditional automakers and the current layout of technology giants such as Baidu, Tencent, and Huawei at the time of automakers' transformation. Finally, it analyzes the six opportunities and three challenges for Huawei to enter the automotive industry. The digital transformation of the future automotive industry is unstoppable.

Digital transformation seems to be an unfamiliar term to traditional automobile practitioners.

However, the reality is that the digitization of automotive products, the digitization of business operations, and the digitization and virtualization of all physical things will become a strategic decision that traditional automakers will have to face, a matter of life and death.

Then, software will define the industry and data will drive operations.

At the same time, most of the technological changes currently faced by the century-old automobile industry cannot be circumvented by digitalization. The core technology for achieving digital transformation is cloud computing.

Almost all technology giants have seen the huge opportunities hidden in the digital transformation of the automotive industry and have launched a fierce competition around it, in the name of "industrial Internet" and "software-defined".

Huawei, one of China's most respected technology giants, has also appeared on this battlefield. There is no doubt that in the coming period, it will go all out to fight with other technology giants in the field of digital transformation of the automotive industry.

1.
Digital transformation is the real core strategic transformation facing automobile companies at this stage, and it is also the biggest challenge.

The automotive industry is undergoing a once-in-a-century technological transformation. Concepts such as electrification, automation, and networking are emerging one after another. It is not easy for decision makers of automotive companies to make the right trade-offs and choices.

The flowers are so numerous that they are dazzling.

However, if you look beyond the noise, you will find that electrification, automation and networking are just new technologies for car companies or cars. Whether or not a car company has these technologies does not determine the life or death of a car company. If a car company does not have the ability to develop its own technology in the short term, there will be corresponding suppliers in the market.

In addition, adding one or more technologies to traditional cars does not change the competitiveness of the product. Traditional EVs have repeatedly proven this by failing in the market.

Digital transformation is the real core challenge facing traditional automakers at this stage:

Because for automotive products and car companies, digital transformation is not just about tinkering with certain parts, but an overall change that involves the reshaping of product concepts, operating concepts, organizational forms, and even corporate genes.

The core changes are:

In terms of product definition, cars will change from mechanical products to software-defined products and digital products. In terms of business operations, they will change from traditional technology, manufacturing, and sales to new technology, new manufacturing, and new retail.

Behind these changes is the digitalization of everything, whether it is hardware products, processes, procedures, or business models, all of which must be standardized and virtualized. Operations can be defined through software and driven by data.

After 30 years of development, Internet technology has begun to fully enter traditional industries and digitally integrate with traditional businesses. This trend is unstoppable.

The power of digital transformation has been fully demonstrated through the practice of new retail.

For example, after a retail enterprise is digitized, not only the offline physical stores are operating, but there is also a digital virtual store operating in the cloud.

The benefits of this are obvious. Managers can understand the operation of physical stores from anywhere, adjust sales, procurement, logistics and other operational strategies, and understand customer needs. At the same time, virtual stores can conduct online sales to further expand the store's service capabilities.

Obviously, ordinary sales outlets are powerless against the impact of stores that have undergone digital transformation.

For the traditional automotive industry, it is imperative to comprehensively promote digital transformation.

First, "barbarians" with Silicon Valley genes like Tesla have already rushed to our doorstep. On the surface, people in traditional industries always tend to look at Tesla's products from the configuration and technical level, and even copy them.

However, when Musk designed the product, he was not essentially creating a traditional car product, but a digital car. In addition to having excellent driving performance, the biggest difference of Tesla's car is that it is a digital car in its initial architectural design, including a unified computing platform, a unified operating system, always online, and continuous OTA, which will eventually form a huge application ecosystem.

When Apple created the iPhone, it was not creating a mobile phone, but a mobile computer. Therefore, Nokia was ultimately defeated.

If traditional car companies cannot define cars as digital cars from the perspective of architecture, and only install some new technologies on traditional cars, the final result may be a dimensionality reduction attack. New technologies superimposed on traditional architectures are basically difficult to play a role. Only on a completely new architecture can new technologies truly play their greatest role.

Unfortunately, more traditional car companies pay much more attention to adding external technology than building a completely new automotive product architecture.

The same is true for operations. Digital transformation will greatly affect operational efficiency. Tesla has already been very successful in new retail, and the next direction of change will definitely be "new manufacturing."

The digital transformation of the automotive industry will undoubtedly be a race to the death. Surprisingly, Volkswagen Group, a German automaker known for its tradition and conservatism , was the first to cross the starting line.

On February 25, 2019, the German auto giant established a department called "Digital Cars and Services" within the company, and Christian Senger, the former head of MEB platform research and development of Volkswagen Group, was appointed as the head of this department. At the same time, Senger became the first director of the Volkswagen brand passenger car board to be responsible for software business.

Senger's mission is very clear. His boss, Volkswagen Group CEO Herbert Diess, has clearly stated that Volkswagen will become a software-driven car company, and car products will become software-defined products. To this end, Volkswagen Group plans to invest half of its annual R&D budget of nearly 14 billion euros in software development in the near future.

Herbert Diess has warned all parts suppliers that Volkswagen Group will take over the software development of core components in cars.

In the future, Volkswagen Group will open most of the control functions on its cars and provide them to third-party application developers in the form of API interfaces for them to define through software.

For programmers in the future, we can even imagine that most of the vehicles in the world, including the sensors in these vehicles, will be virtualized and put on the cloud. We can interact with them through software while sitting in the office or at home, and let these hardware do what we want them to do.

For example, if we give car owners a share of the profits in a good way and establish connections with the cameras of 10 million cars, we can build an omnipotent "Sky Eye" system that can monitor violations, road conditions, and even suspects through AI algorithms.

For Senger, his first task is to standardize, virtualize and cloud-native automotive products and their hardware. Of course, for the Volkswagen Group, not only automotive products need to be digitized, but also their services, factories, sales, procurement, after-sales and other work need to be digitized.

Technology giant Microsoft has taken the lead in getting the first piece of the pie in the large-scale digitalization of the traditional automotive industry. Together with Volkswagen, they will jointly build something called the "Volkswagen Automotive Cloud" based on Microsoft Azure Cloud.

In order to digitize all automotive products, Senger teamed up with Microsoft engineers to do two important things: on the one hand, more than 70 ECUs in the car were eliminated and integrated into three core computing platforms to be responsible for the computing needs of all the actuators on the car. This move achieved the standardization of actuators and chips; on the other hand, a system called vw.OS was built to control these hardware and provide standardized APIs so that software can control these hardware. Of course, after completing hardware standardization and virtualization, cloud computing is a must.

In this case, the experience a car can bring to users no longer depends on the hardware inside the car, but on the car's software application ecosystem. The richer the application ecosystem, the more competitive it is, the larger the amount of data, and the greater the amount of cloud usage.

In the era of digital cars, the story of the Android ecosystem defeating the WinPhone ecosystem will continue to unfold.

At the same time, the wave of digital transformation is penetrating deeply into the operations of automobile companies.